Talking Freight2/16/11

Ken BraunbachSenior Director-Transportation

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Wal-Mart Distribution Network

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3

Import DC Alignment

4

Walmart International Distribution Center Count

As of…May 31, 2009

Total DC’s 141

Canada 10 DC’s

Mexico15 DC’s

Puerto Rico3 DC’s

Central America11 DC’s

Brazil16 DC’s

Argentina1 DC

UK34 DC’s

China9 DC’s

Japan36 DC

India1 DC

Chile5 DC’s

5

Walmart International Stores Count

As of…May 31, 2009

Units 3,685

International Associates 680,000 +

Canada 312 Units

Mexico1,232 Units

Puerto Rico56 Units

Central America509 Units

Brazil347 Units

Argentina29 Units

UK360 Units

China103 TM Units149 WMT Units

Japan371 Units

India*26 Units

* Franchise Units

Chile216 Units

6

Walmart International Facts

Global Presence

•15 countries •7,900+ stores and clubs •200 million customers per week•228 DC’s

Multi-format Operation

•10 different formats•53 banners

Multiple Businesses

Multiple Equity Structures

•Retail, wholesale, restaurants, real estate development, bakeries, meat plants, food sourcing and processing, bank

•Mexico – Majority holder in a public company•Central America – Majority holder in a JV• India – 50/50 JV in a holding company & Franchisor

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ASDALIVING

ASDAWALMARTsupercenter

L I V I NMAGAZINE

Express

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Walmart International FactsInternational – High growth platform for Walmart

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

FY'99 FY'00 FY'01 FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08 FY'090

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Sales

Store Count

An

nu

al S

ales

(M

illio

ns

US

D)

at R

epo

rted

Rat

es

$98 billion in annual sales

9

“Redefinition”“Asset-Utilization”“High-Growth”“Emerging”

Examples of Supply Chain Market Maturity

India Brazil United States Japan

10 10

Industry

• Climate Change• Driver Shortage• Fuel/Commodity Cost• Highway Congestion• Regulatory Change

11

Inbound Expense by Mode

Truckload69%

Overnight1%

LTL20%

Consolidators1%

Sm Pkg7%

Ocean2%

12

Load Count 2010 vs. 2009

Freight Type TY LY % Change

Construction 8,333 9,983 -17%

Fixtures 80,619 37,820 113%

GMT 970,472 770,149 26%

Grocery 556,606 538,275 3%

PAD 139,131 152,134 -9%

Sams 45,374 43,748 4%

TAB 23,759 41,117 -42%

Remix 111,501 84,777 32%

LTL 460,528 508,747 -9%

Grand Total 1,935,795 1,678,003 15%

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Current Impacts

• Beyond the recession….

– Government regulations• Comprehensive Safety Analysis (CSA)• Hours of Service• EOBR• CARB

– Financial• Higher fuel costs• Limited access to credit• Residual values- Book to actual value gap

……………Decreased Capacity

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Less Discussed Issues

2009 Temperature Control Conference

• Weather

• CSA Tort reform-Negligent retention, hiring, and awarding Selection criteria

• SecurityMexico-Shift in manufacturing Food supply chain safety

• Steamship chassis management

• Currency stability-InflationMultinational corporations profitabilityCanadian manufacturing demandIndia inflation

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2011 Transportation Initiatives

• Transportation Collaboration Eliminate empty miles from our networksAllow the carriers to engineer sectors of our networkMutual long-term network, financial and service stabilityCost and inflationary indices used for rate escalators

• Expand E-Commerce and Multichannel Logistics

• Conversion-Convergence

• Environmental Sustainability

• Local Food Initiatives

2009 Temperature Control Conference

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More People – More Freight

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Americans require a freight system that moves 40 tons of freight per person annually. With current population growth projections, we are looking at moving 4 Billion more

tons of freight in the next 40 years.

Source: U.S. Census Bureau; FRA’s National Rail Plan

1993 1997 2002 2007 2010 e 2015 e 2020 e 2025 e 2030 e 2035 e 2050 e200

250

300

350

400

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Population (millions) Tonnage (billions)

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Truckload Freight Index

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Dry-Van Only

Source: Morgan Stanley

Truckload demand relative to capacity continued to outpace last year and is the highest it has been in the past five years.

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Purpose

19 2009 Temperature Control Conference

Intermodal Opportunities

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Marketplace Update

• Demand continues to increase

• Highway capacity continues to decrease

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Sources: IANA, ATA and Baird

Year-over-year December 2010 Full Year

Domestic Intermodal 9.5% 10.6%

International Intermodal 15.0% 18.5%

For-Hire Truck Tonnage 4.2% 5.7%

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Modal Shift Opportunity

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With improvements in service and facilities, Intermodal is becoming more competitive in shorter distances, absorbing more of the projected growth in freight.

% truck % intermodal conversion %rail

Source: FRA’s National Rail Plan

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Domestic Intermodal Volume

Source: Intermodal Association of North America

Domestic Intermodal demand showed continued growth, with volume up over 8% for the fourth quarter and up over 9% in December.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec350,000

400,000

450,000

500,000

550,000

600,000

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

3.7%

6.9%

15.9%

12.3%

13.9%13.3%

10.6%

14.4%

10.2%

5.3%

10.9%

9.5%

% Change 2008 2009 2010

2323

Western Intermodal Current State (2010)Western Railroad Container (COFC) Breakdown

24 2009 Temperature Control Conference

Environmental Initiatives

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Alternatively Fueled Trucks

Hybrid Assist

Liquid Natural Gas (LNG)

Full Propulsion Hybrid

Reclaimed Grease Fuel (RGF)

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FYE 2010 Operational Results

• 3.0% more cases and 6.9% less miles

• 14.2% increase in GDC trailer cube

• 5.0% reduction in empty mileage

• 12.7% reduction in load dist ~ 34 Miles

We delivered 161.2M more cases while reducing

mileage by 97.1M…

“If nothing was done we would have passed on an additional

12bp of expenses, or $178.1M to our Stores and Clubs”

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Zero Waste – Before & After

Packaging for Kid Connection Toys

Yogurt Lids

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Just 277 SKU’s. Imagine the possibilities…

+

Used 727 less shipping containers.Saved $3.5 million on transportation costs.

+

Saved 5,100 trees.

Prevented 1,300 barrels of oil from being used.

$3.5 million

5,100

=1,300

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• 16 cases per row

• 20 rows per load

• 320 cases per load

• 10 units per cases

= 3,200 pillows/load

Existing Load Configuration Large Pillows

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Proposed Load Configuration Large Pillows

• 26 cases / row

• 17 rows / load

• 442 cartons per load

• 12 units per carton

• = 5,304 pillows/load

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New Carton Design Annual Reduction

• 17 items impacted totaling 21.9M units / yr

• 14 million less square feet of corrugate

• 1.6 million less lbs of corrugate

• 1,800 less truckloads

• Estimated savings of $2.1M

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• The Walmart Customer• 140 M customers per week shop at Walmart or Sam’s

Clubs.

• What Has Changed?– Price Point Decisions– Payday Patterns– Purchase Priorities– Size Selection– Staycations– Tax Return Delays– Credit Crunch

The Customer

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Goldman Sachs January Comparable-Store Sales for Major Retailers (a)                

         

January 2011 January February January 2011 January February

Actual Estimate* 2010 2010 Actual Estimate 2010 2010

                        

DEPARTMENT STORES       DISCOUNT STORES              

Dillards 6.0% 1.0% (5.0)% 2.0 % Target 1.7 % 3.0 % 0.5 % 2.4 % 

Macy's 2.6 1.0 3.4 3.7                 

J.C. Penney Stores (b) (1.2) (3.0) (4.6) 1.2                  

Kohl's 1.4 1.0 6.5 3.7                  

Nordstrom 4.8 3.0 14.0 10.3   WAREHOUSE CLUBS               

Saks 4.4 4.0 7.0 2.0   Costco (incl fuel) 9.0 % 6.0 % 8.0 % 9.0 %  

Neiman Marcus 9.8 4.0 6.8 6.2   BJ's (incl fuel) 2.7   3.0   8.4   7.5    

                     

       

SPECIALTY APPAREL            

Abercrombie & Fitch (4.0)% (3.0)% 8.0% 5.0 %    

American Eagle Outfitters (6.0) (13.0) 10.0   6.0            

Aeropostale 1.0 (7.0) 6.0  7.0            

The Buckle 4.3   3.0  (1.2)  5.1    

Gap, Inc. 1.0 (4.0) 5.0   3.0      

Gap N. America 0.0 (6.0) 2.0   0.0      

International 8.0 3.0 3.0   0.0  

Banana Republic N. America 4.0 (2.0) 4.0 6.0  

Old Navy N. America (3.0) (4.0) 10.0 5.0  

Hot Topic (c) (3.3) (1.6) (13.1) (7.0) 

Limited Brands (c) 24.0 7.0 6.0 10.0  

Victoria's Secret 35.0 12.0 17.0 10.0  

Bath & Body Works 9.0 0.0 (8.0) 11.0   January 2011   January February  

        Actual Estimate 2010 2010

        RETAIL COMPOSITE INDEX 4.3   2.3 % 4.9 % 5.7 %

OFF-PRICE         Department Stores 2.4 0.6   3.0 % 3.8  

Ross Stores 3.0 % 2.0% 8.0% 11.0 % Specialty Apparel/Off Price 6.0 (1.8)  5.8 % 5.4  

TJX Co. (d) 2.0   0.0   12.0 % 10.0 %   Discount Stores 4.8   3.8   5.6 % 6.6  

            

*Estimates are Goldman Sachs estimates and do not reflect consensus analyst expectations

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To Be the Best in Market Supply Chain …

• Think Like a Customer

• Be Compliant

• Set High Expectations for Low Cost

• Be Sustainable